Emanuel orders hike in health care contributions for top brass
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More than 300 City Hall bureaucrats — from Mayor Rahm Emanuel on down — soon will be making sharply higher contributions toward the skyrocketing cost of their health care.
Emanuel ordered the change to correct what he calls an “imbalance” that had let city employees with the fattest paychecks largely off the hook.
City employees pay 1.29 percent of their annual salaries toward health insurance for single coverage, 1.99 percent for couples and 2.48 percent for families, regardless of the number of children. But the percentages are applied only to the first $90,000 earned.
Thanks to the cap, Emanuel’s contribution works out to about 1 percent of his $216,210 salary — and that’s for a health care plan that covers his family of five. An administrative assistant with an annual salary of $50,000 falls below that cap; he pays 2.48 percent, which is about $1,240, for family coverage.
Starting Jan. 1, the double-standard will end for 313 non-union employees whose annual salaries exceed $120,000.
Whatever percentages they pay for health care — whether it’s 1.29 percent for singles, 1.99 percent for couples or 2.48 percent for families — will apply to their entire salary, not just the first $90,000.
For Emanuel, the change will increase the annual health insurance contribution he makes to cover his family by a whopping 140 percent — from $2,232 to $5,362.
For the mayor’s $162,492-a-year communications director, Kelley Quinn, it’ll more than double what she pays for single coverage — from $1,161 to $2,089.
A City Hall bureaucracy notorious for having redundant layers of middle-management has 746 other non-union employees with salaries ranging from $90,000 to $120,000. Those employees will be unaffected by the change. They will continue to have the percentage they pay for health care coverage capped at $90,000 of their salary.
That means Chicago’s 50 aldermen won’t be affected either. Their annual salaries range from $106,558 to $117,333 depending on whether they chose to accept annual cost-of-living increases.
A hefty and steadily rising chunk of the city’s budget is gobbled up by medical, dental and vision care provided for city employees, retirees and the spouses and dependents of both.
Between 2005 and 2014, those health care costs swelled by 29 percent — from $340.2 million to $439 million — even as the city workforce shrank during the same period from 38,366 to 32,959.
Like many major cities, Chicago’s health care program is self-funded. That means the city finds it more cost effective to pay out of pocket for covered services rather than pay premiums to a third-party insurer.
The increased health care contributions for top brass will save the city $380,000 a year, which is not even a drop in the bucket when compared with the $754 million in new revenue Emanuel needs to balance his 2016 budget and shore up police and fire pensions — without factoring in the $9.5 billion teacher pension crisis.
But it’s a symbolic move that Emanuel hopes will convince Chicago taxpayers that he’s doing all he possibly can to wield the budget ax before proposing a massive property tax increase, a first-ever garbage collection fee and a host of other increases to solve the $30 billion pension crisis at the city and public schools that has dropped Chicago’s bond rating to junk status.
The mayor can order the change unilaterally, since none of the affected employees are represented by unions.
“There is an imbalance in the city’s current health care plan and I want to fix that problem,” Emanuel said in a statement released by his office.
“Beginning in the 2016 budget, I’m requiring senior management to pay their fair share when it comes to health care coverage.”
The change in health care contributions comes at a time when Emanuel is assuming that he will be allowed to complete a three-year phaseout of the city’s 55 percent subsidy for retiree health care and that a lawsuit that seeks to reinstate the $108.7 million annual` subsidy falls flat.
Clint Krislov, an attorney representing the retirees, warned the mayor is rolling the dice just like he did by authorizing a school budget that assumes $480 million in pension help from Springfield that may never come.
On Oct. 26, Circuit Judge Neil Cohen is expected to rule on the city’s motion to dismiss the retiree lawsuit.
“They abandoned the argument that health care benefits are not guaranteed by the Illinois Constitution. That issue was decided in our favor a year ago. What they’re saying now is, nobody said these benefits would continue for a lifetime and it can’t be enforced against the city,” Krislov said.
“Judge Albert Green rejected that argument in 1988, and we believe Judge Cohen will reject the city’s arguments now. It doesn’t matter whether you call them lifetime benefits. If they’re benefits of participation in an Illinois retirement system, you keep them for life.”
Although retirees have been paying dramatically higher premiums for the last two years, Krislov said they may ultimately be entitled to hefty refunds.
“I wouldn’t be spending that money anytime soon if I were the mayor. The law has become much stronger for retirees on their health care claims because of the [Illinois] Supreme Court’s two decisions, mainly the case they came out with on July 3, 2014, saying health care benefits are among the benefits protected by the Illinois Constitution,” Krislov said.
As for the mayor’s symbolic decision to raise health care contributions for top brass, Krislov said, “What he’s trying to do is to get things on a better footing going forward. That is the key to resolving the city’s finances. As [former Chief Financial Officer] Lois Scott said, `It’s not because we can’t deal with the problem. It’s that we’ve chosen not to.’ This is part of his effort to incrementally deal with the problem.”
Ald. Roderick Sawyer (6th), chairman of the City Council’s Black Caucus, said he would rather see top wage earners take a pay cut than mess with their health care contributions.
“Health care premiums are going out of control anyway. I just don’t like it. If the concept is to double it, I would be against it,” Sawyer said.
Earlier this month, Emanuel claimed he had already cut $106 million in city spending and “found another $10 million” in just one day.
Hours later, the mayor’s office released a list of cuts that totaled $32 million.
It includes $18 million by freezing spending at downtown tax increment financing districts; $4 million by reforming the city’s investment strategy; $2 million by auctioning off surplus vehicles, vacuum cleaners and refuse carts; $2.2 million by removing redundant printers and eliminating unused cellphones and land lines; and $3.3 million by ending free garbage pickups at more than 1,800 multiunit residential buildings.
“I’ve always said, you can’t do it just on cuts. And you can’t just do it on tax increases. There’s got to be a blend. But you can’t rely on taxpayers to bail out a government that needs to make fundamental changes,” the mayor said at the time.
“There’s a lot of money locked up and value locked up in old ways of doing things. … While I appreciate all the aldermen coming forward with ideas about revenue, I’m having the budget team and … cabinet go through their own budgets to find cuts and savings in a bureaucracy that, in my view, is bloated and needs to be changed.”